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Goods and Services Tax Act and Its Impact On GDP
Goods and Services Tax Act and Its Impact On GDP
Name
Place
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ACKNOWLEDGEMENT
(YOUR NAME)
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SUMMARY
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INTRODUCTION
WHAT IS GOODS AND SERVICES?
Goods are items that are usually (but not always) tangible,
such as pens, salt, apples, and hats. Services are activities
provided by other people, who include doctors, lawn care
workers, dentists, barbers, waiters, or online servers, a
book, a digital videogame or a digital movie. Taken
together, it is the production, distribution,
and consumption of goods and services which underpins
all economic activity and trade. According to economic
theory, consumption of goods and services is assumed to
provide utility (satisfaction) to the consumer or end-user,
although businesses also consume goods and services in
the course of producing other goods and service.
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WHAT IS TAX?
A tax (from the Latin taxo) is a compulsory financial
charge or some other type of levy imposed upon a
taxpayer (an individual or other legal entity) by a
governmental organization in order to fund various public
expenditures. A failure to pay, along with evasion of or
resistance to taxation, is punishable by law. Taxes consist
of direct or indirect taxes and may be paid in money or as
its labour equivalent. The first known taxation took place
in Ancient Egypt around 3000–2800 BC.
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taxes, inheritance taxes, estate taxes, gift taxes, property
taxes, sales taxes, payroll taxes or tariffs.
TAXES SUBSUMED?
The single GST subsumed several taxes and levies which
included: central excise duty, services tax, additional
customs duty, surcharges, state-level value added tax and
Octroi. Other levies which were applicable on inter-state
transportation of goods have also been done away with in
GST regime. GST is levied on all transactions such as
sale, transfer, purchase, barter, lease, or import of goods
and/or services.
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India adopted a dual GST model, meaning that taxation is
administered by both the Union and State Governments.
Transactions made within a single state are levied with
Central GST (CGST) by the Central Government and
State GST (SGST) by the State governments. For inter-
state transactions and imported goods or services, an
Integrated GST (IGST) is levied by the Central
Government. GST is a consumption-based
tax/destination-based tax, therefore, taxes are paid to the
state where the goods or services are consumed not the
state in which they were produced. IGST complicates tax
collection for State Governments by disabling them from
collecting the tax owed to them directly from the Central
Government. Under the previous system, a state would
only have to deal with a single government in order to
collect tax revenue.
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HSN CODE?
HSN is an 8-digit code for identifying the applicable rate
of GST on different products as per CGST rules. If a
company has turnover up to ₹1.5 Crore in the preceding
financial year then they need not mention the HSN code
while supplying goods on invoices. If a company has
turnover more than ₹1.5 Crore but up to ₹5 Cr then they
need to mention the first two digits of HSN code while
supplying goods on invoices. If turnover crosses ₹5 Cr
then they shall mention the first 4 digits of HSN code on
invoices.
RATE?
The GST is imposed at variable rates on variable items.
The rate of GST is 18% for soaps and 28% on washing
detergents. GST on movie tickets is based on slabs, with
18% GST for tickets that cost less than Rs. 100 and 28%
GST on tickets costing more than Rs.100 and 28% on
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commercial vehicle and private and 5% on readymade
clothes. The rate on under-construction property booking
is 12%. Some industries and products were exempted by
the government and remain untaxed under GST, such as
dairy products, products of milling industries, fresh
vegetables & fruits, meat products, and other groceries
and necessities.
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E-WAY BILL?
An e-Way Bill is an electronic permit for shipping goods
similar to a waybill. It was made mandatory for inter-state
transport of goods from 1 June 2018. It is required to be
generated for every inter-state movement of goods
beyond 10 kilometres (6.2 mi) and the threshold limit
of ₹50,000 (US$720).
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plugging loopholes like overloading, understating etc.
Each e-way bill has to be matched with a GST invoice.
The tax came into effect from July 1, 2017 through the
implementation of One Hundred and First Amendment of
the Constitution of India by the Indian government. The
tax replaced existing multiple flowing taxes levied by
the central and state governments.
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expected to reshape the country's 2.4 trillion dollar
economy, but not without criticism. Trucks' travel time in
interstate movement dropped by 20%, because of no
interstate check posts.
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The GSTN's authorised capital is ₹10
crore (US$1.4 million) in which initially the Central
Government held 24.5 percent of shares while the state
government held 24.5 percent. The remaining 51 percent
were held by non-Government financial
institutions, HDFC and HDFC Bank hold 20%, ICICI
Bank holds 10%, NSE Strategic Investment holds 10%
and LIC Housing Finance holds 11% .
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HISTORY
FORMATION
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The Ravi Dasgupta committee which was also tasked with
putting in place the back-end technology and logistics
(later came to be known as the GST Network, or GSTN,
in 2015). It later came out for rolling out a uniform
taxation regime in the country. In 2002, the Vajpayee
government formed a task force under Vijay Kelkar to
recommend tax reforms. In 2005, the Kelkar committee
recommended rolling out GST as suggested by the 12th
Finance Commission.
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committee. Dasgupta admitted in an interview that 80%
of the task had been done.
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was passed. Over the next 15 to 20 days, 18 states ratified
the Constitution amendment Bill and the President Pranab
Mukherjee gave his assent to it.
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legislature passed its GST act on 7 July 2017, thereby
ensuring that the entire nation is brought under an unified
indirect taxation system. There was to be no GST on the
sale and purchase of securities. That continues to be
governed by Securities Transaction Tax (STT).
LAUNCH
The GST was launched at midnight on 1 July 2017 by the
President of India, and the Government of India. The
launch was marked by a historic midnight (30 June – 1
July) session of both the houses of parliament convened at
the Central Hall of the Parliament. Though the session
was attended by high-profile guests from the business and
the entertainment industry including Ratan Tata, it was
boycotted by the opposition due to the predicted problems
that it was bound to lead for the middle and lower class
Indians. It is one of the few midnight sessions that have
been held by the parliament - the others being
the declaration of India's independence on 15 August
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1947, and the silver and golden jubilees of that
occasion. After its launch, the GST rates have been
modified multiple times, the latest being on 22 December
2018, where a panel of federal and state finance ministers
decided to revise GST rates on 28 goods and 53 services.
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STATISTICS
COLLECTIONS
RETURNS
Around 38 lakh new taxpayers have registered under GST regime and the total count has crossed one crore if we include
the 64 lakh earlier ones. Total number of taxpayers were above 1.14 crore in October 2018.
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POSITIVE AND NEGATIVE IMPACT OF GST
ON GDP.
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3. Reduce the cost of doing business- GST has
changed VAT all over India. Now we do not need to
pay different amounts of taxes in different states. It is
one tax system for all states of India and so we have
already got rid of various taxes and duties on our
businesses.
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NEGATIVE IMPACT OF GST:
1. Dual Control - GST is being referred to as a single
taxation system but in reality it is a dual tax because
both the state and centre both will collect separate tax
on a single transaction of sale and service.
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CONCLUSION
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inputs taxes collected. GST, being a destination-based
consumption tax based on VAT principle.
GST will simplify India of its complex and complicated
indirect tax structure and will ensure a single unified tax
regime, which will be reshaping India’s indirect tax
structure.
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